Country Report

Russian Furniture Industry

By Artem Vasiliev, Chief Editor of Mebelny Bisnes

Saint Petersburg, city and
a federal subject of Russia

According to the results
of 2011, Russian furniture industry
finally got the better of recession: the
production volume exceeded the level
of pre-crisis 2008. The year-to-year
increase amounted to 19.8%, from about 89.5 billion
rubles in 2010 to 107.2 billion rubles in 2011. The
shadow economy sector is growing much faster: its
estimated production volume, which is not included
in the official statistics, was about 50.6 billion rubles
in 2010 and reached 80.7 billion in 2011. As a result,
Russian furniture production increased the level of
2008 by 6% in current prices.

Traditionally, Central Federal District has the
largest share (38.6%) of domestic furniture
production. The smallest share is in Far Eastern
Federal District (2.1%). Last year, the highest
rates of growth have been achieved in North
Caucasian Federal District (130.9%) and Volga
Federal District (122.2%).

Production index fell below 100 percentage points
in the categories of chairs, armchairs, desks, linen
cupboards. Zero dynamics has been shown in
the sector of sofa beds. The remaining product
categories are in the black, with the highest growth
recorded in the mattress sector.

Future forecasts generally agree that recovery in
demand and further growth of retail sector will be
smooth but firm. These prospects are supported by
positive factors such as relatively high income level,
rapid emergence of innovations, and yet a high
proportion of young consumers (up to 40% of them are people under the age of 30, who will improve
their welfare and complement the demand).

As to development prospects of furniture market in
Russia for the near decade, the key factor would
be the consequences of Russian entry into the
World Trade Organization. One proof of this is that
the share of imports in the Russian furniture market
remains to rise: it’s about 55%, according to the
official statistics, and about 40% when taking into
account the shadow economy sector.

In 2011, the furniture imports exceeded US$2.96
billion, and its growth rate (+35% year-to-year) is
much faster than in domestic production. More than
a half of imported furniture came from Italy, China
and Belarus. In spite of considerable import duties
(40% and above), the volume of imports of low
priced furniture is growing at a faster pace, and the
positive dynamics of furniture imports from China
also remained consistently high. Such furniture
competes directly with the products of the majority
of domestic producers.

Furniture exports decreased in 2011 by 2.1%, with the
total about US $214.5 million (14 times less than the
imports). It seems that the actual market conditions
are not forcing domestic players to open up new
foreign markets for their products. But nevertheless,
development of the export potential is a burning issue
for the Russian market players today.

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